North Carolina Divorce Lawyers Blog
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Arbitration and Vacating Awards

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Gribble v. Medcat Enters., (No. COA19-1092) (unpublished)

In North Carolina, some issues can be settled with a pre- or post-marital agreement. This is a contract. In such contracts, spouses can agree to certain terms and conditions, as well as insert an Arbitration Clause. There are certain advantages to arbitration, such as time and cost, that make it an attractive alternative to court. Our laws have reflected that trend and enacted the Family Law Arbitration Act. It is a default set of rules governing arbitrations arising from marital separation and divorce. Below is a case that reflects how a court may handle objections over the outcome of arbitration.

  • Facts: Medcat entered into an agreement to purchase a car washing and laundromat business from Gribble. To facilitate the deal, the parties signed a Purchase Agreement that contained an Arbitration Clause. Later, Medcat stopped paying their debts, and Gribble sued for breach of contract. Gribble obtained a default judgment, and Medcat then successfully moved to set aside the default, and then filed responsive pleadings in which they claimed as a defense the Arbitration Clause. Gribble and Medcat agreed to arbitrate. Gribble was awarded his remedy in the arbitration, then sought to confirm the award in court. Trial court confirmed, and Medcat appealed.

 

  • Issue: Was the trial court in  error in confirming the arbitrator’s award?

 

  • Holding:

 

  • Rationale: The judicial review of an award from arbitration is confined to determining whether there exist any specific grounds for vacating the award under the appropriate arbitration statute. Arbitrators are more flexible in law and evidence. Gribble and Medcat agreed to argue all claims arising from their contracts in arbitration. Medcat made arguments regarding subject matter jurisdiction and standing to the arbitrator. The arbitrator made findings of fact and conclusions that addressed those arguments, and made a decision that was consistent with the arbitration agreement.

 

  • Lessons and Observations:

 

  1. The application of the reasoning in this case is very likely how an appeal to the Court for a Family Law Arbitration would occur. They would look to the applicable arbitration statute, here the Family Law Arbitration Act, and determine whether or not the Court has specific grounds to vacate the award. § 50-54 sets the applicable grounds for vacating an award:

(1) Procurement of the award was by corruption, fraud, or other undue means; (2) arbitrator was not neutral; (4) the arbitrator was not hearing material evidence or was procedurally prejudicing a party; (5) there was no arbitration agreement; (6) the court determined that the award for child support or child custody was not in the best interest of the child; (7) the award included unnecessary punitive damages; or (8) the parties contracted in an arbitration agreement for judicial review of errors of law in the award, in which case the court shall vacate the award.

  1. Assuming this case serves as a guide: If parties have agreed to arbitrate specific issues arising from their separation/divorce, then the award will not be disturbed absent showing one of the above eight grounds. More basically, if the parties agreed to and argued a specific issue that the arbitrator then competently decided on, a Court would likely not vacate.
  2. There are a few considerations in family law arbitration that may not be present in commercial arbitrations; namely, the focus on the best interests of the children. Family law arbitrations can, in certain circumstances, encompass child support and custody. Our policy, however, remains that the award is tailored to best suit the needs of the children.